Committee on Finance. - Vote 19—Miscellaneous Expenses.

Wednesday, 19 February 1964

Dáil Eireann Debate
Vol. 207 No. 9

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Minister for Finance (Dr. Ryan): Information on James Ryan  Zoom on James Ryan  I move:

That a supplementary sum not exceeding £50,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1964, for certain Miscellaneous Expenses, including certain Grants-in-Aid.

Until now the Racing Board have been able to finance their work for the improvement of horse racing and horse breeding from the proceeds of the levy on bookmakers in respect of course bets and the deduction from totalisator stakes.

After meeting administrative expenses and ordinary taxation, the funds collected in this way are applied by the Board mainly to increase prize money; to subsidise the carriage of horses; to finance the costs of the Photo-finish, Photo Patrol and Dope Detection Units operated by the Stewards of the Turf Club and to improve stands, buildings and race courses.

The money put into the industry by the Board has increased substantially over the past few years. In the year ended 31st December, 1962—the latest for which published accounts are available—payments amounted to some £326,000. Of this figure, contributions towards prize money accounted for £246,000 and payments towards carriage of horses for £50,000.

Bearing in mind the fillip which the horse-racing industry in Britain would derive from the recent establishment there of the Horse-race Levy Board, the Racing Board felt that still further increases in prize money, etc., were needed if Irish racing was not to deteriorate seriously in comparison [1261] with British standards and if owners and trainers were not to be attracted away from this country to the disadvantage of the industry and of the economy generally. The Board were satisfied that it would not be practicable to raise the extra money needed by means of an increase in the levy on bookmakers or in the deduction from tote stakes because they apprehended that a reduction in the volume of betting would ensue from such measures. The Board, therefore, approached me in November, 1962, with a proposal for direct State assistance.

Before a final decision was reached on this proposal, the turnover tax introduced a new factor into the situation. Indeed, during the debate on last year's Finance Bill, Deputy Cosgrave put forward an amendment designed, he explained, to exempt course betting from the new tax. I indicated why I felt unable to accept the amendment but at the same time I told the Deputy that I intended to meet members of the Racing Board and that, if they convinced me that the tax would have an adverse effect on horse racing, I would be very sympathetic to their problem.

In the discussion with the Racing Board which followed, the members held strongly that the Board would have to bear the turnover tax in respect both of betting on the course with bookmakers and on the tote in the belief that, if it were attempted to pass on the tax, attendances at race meetings would fall. Given the Board's expert knowledge in this field I felt constrained at the time to accept their opinion that they would have to bear the tax out of their own funds. As events are now shaping, it may be that it will in the future be possible to take a less pessimistic view. On-course betting increased in volume last November and December as compared with the corresponding period in earlier years and both betting and attendances are bound to reflect in the future the increase in money incomes which is at present taking place.

It is clear, however, that the position whereby the Board bears the tax [1262] is now depleting the funds available for the Board's activities. In fact, a deficit is already expected for 1963 on ordinary account and without reckoning turnover tax.

Having taken account of all the circumstances, I have come to the conclusion that I have no alternative but to supplement the Board's finances by means of the £50,000 asked for in this Supplementary Estimate so that there will be no impairment of their capacity to continue to carry out the important functions allotted to them in promoting the bloodstock industry which is such a valuable item in our national economy.

I recommend the Supplementary Estimate to the House accordingly.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  The effect of this Supplementary Estimate is to exempt racecourse betting from the impact of the turnover tax. I think the Minister is right to do this. I think the whole principle of the turnover tax is crazy, primarily because it bears so unjustly on the people who have to buy food, fuel and clothing but also because of the economic argument that it gravely endangers a number of important export industries in so far as it operates to increase their costs. You find yourself in this dilemma. If you accept that it is fair and just to levy a turnover tax on bread, flour, butter, tea, sugar, and children's boots and clothes, and the very turf and coal that goes into the fire or the range, it sounds terribly unfair to solemnly exempt racecourse betting from the impact of the tax.

This society will not function, this State cannot survive, if we cannot sell a sufficiency of our production abroad to pay for our imports. The indiscriminate operation of this tax is throwing up one anomaly after another. Recently I saw a list issued by the Revenue Commissioners which had been agreed by them—and I hasten to say that the Revenue Commissioners adopted a most constructive and helpful attitude—with the Hardware and Allied Traders' Association. I think the list comprises nearly 200 items in a hardware shop which are exempt from the turnover tax. You could make exactly the same kind of [1263] fantastic anomaly of exempting from turnover tax streptomycin, or some other expensive drug, that you give to a horse or a pig, while requiring a harassed parent to pay the turnover tax if she is buying it for her child. Yet, I think there is much to be said for sparing farmers, who are already put to the pin of their collar, from the impact of this tax.

Now we come to the specific proposal here. Are we in this House to vote to exempt bookies' bets on the racecourse from the turnover tax when we insist on the mother of ten paying it on her children's boots and shoes, not to speak of her food? On balance, I think, yes. I hope we will be able to get rid of this tax altogether but its indiscriminate application is, I say, not only anomalous but unjust. But, ad interim, I think it would be a great mistake to take £50,000 off the Racing Board's resources in view of the fact that they have applied their resources imaginatively and effectively to maintain the status of our bloodstock industry. The bloodstock industry is a very valuable industry. It creates a great deal of employment and earns a great deal of money which is vital to finance the volume of imports coming into this country at the present time. It is an industry which is becoming more and more desperately competitive every year. There is not the slightest doubt that if we are to maintain our position in the bloodstock world, we must have racing here on a scale to maintain our position in the world as a source of bloodstock breeding.

It is manifest that both France and Great Britain, who are our principal competitors, are very anxious to wrest that position from us and unless we can maintain racecourses, and much more important, maintain the supply of money for our classic races, the Irish classic races could cease to compare in significance with classic races in France and Great Britain, which would react, possibly fatally, to the detriment of the livestock industry of this country.

Those of us who have any interest in this industry—I do not claim to [1264] be an authority on horse flesh or racing, but I am interested in it from its economic potential to the country as a whole—have observed with satisfaction that a great many substantial industrial concerns offer their help by sponsoring races. Those not familiar with the situation and who may marvel at the fact that firms adopt this type of advertising ought to recognise how useful this channel of advertising is to this most important industry. If we welcome, as we certainly should, the advertising activities of wealthy firms in sponsoring racing, for precisely the same reason we should welcome the Minister's decision in this regard to relieve the Racing Board of this imposition so that they can make their contribution to what is really the same thing as sponsoring a classic race which would compare with other classic races in France and Great Britain. If we fail to do this or if we put the Racing Board in a position in which they are no longer able to do so, then we might do the bloodstock industry of this country a very desperate injury which in a relatively short time might become irreparable.

I rarely praise the Minister for Finance but in this case I think he was right to admit he was wrong. It is silly if you make a mistake to stick your heels in the ground and refuse to listen to remonstrance or protestation and say what is done cannot be undone. I say he was right in his decision on this matter but I think everyone of us here must feel considerable concern and dismay that we should relieve horseracing and bets from the impact of the turnover tax while we maintain it on the essentials of food, fuel and clothing of our people. I would find it extremely difficult, if I were Minister for Finance, to come to the Dáil and confront the House with such a proposal. Happily, I am in a position now that I can endorse it because I believe I will be in a position to remove that anomaly and to ensure that this turnover tax will no longer bear on the food, fuel and clothing of our people.

In that conviction I approve the [1265] proposal to remove this impost of £50,000 from the Racing Board, this proposal to reverse the decision originally taken to reduce their resources by this sum. I approve it because I am convinced that the restoration of this £50,000 to the Racing Board will be used imaginatively and constructively for the promotion and protection of an industry vital to the country, which is becoming more and more competitive with the passing of every year and which could easily be squeezed out by those who would be glad to see it disappear in order that the bloodstock industries of their own countries could benefit thereby. It is only those who have some familiarity with the circumstances and background of this industry who can probably fully appreciate the reasons for this concession. But, with that knowledge, and in the light of the hopes I make bold to entertain, I am prepared to approve the proposal put forward by the Minister.

Mr. McQuillan: Information on John McQuillan  Zoom on John McQuillan  This Supplementary Estimate is to relieve a very wealthy section of the community— the betting public who attend race meetings—of the burden of paying 2½ per cent turnover tax on their amusement. How crazy can this Government get? There are no grounds whatever for suggesting at this stage that the bloodstock industry is in jeopardy if the turnover tax is imposed on racecourse betting. It is an insult to say of such a wealthy industry that, unless the turnover tax on course betting is removed, it is God help the future of the industry.

There is an interesting story concerning how this Supplementary Estimate came about. The Minister was less than frank with the House in not giving the true story of this bit of political blackmail. Recently, the racing committees in a number of towns were informed that the race meetings in their towns were to be cancelled. These towns included Wexford, the Minister's area; Roscommon, my own area; Kilbeggan, Clonmel and Dundalk. The racing committees were informed that the situation was very unhealthy as far as expense was concerned and the [1266] Board could no longer afford to subsidise racing at these centres.

I am satisfied the Racing Board had no intention of cancelling those meetings. But they used this threat to these towns as a lever to obtain this £50,000 the Minister is giving the Board. I know that when the Committee in Roscommon were informed there was to be an end to the subsidy there, there was a hullabaloo by those interested in racing. The same applied in Wexford. The screws were put on the Minister himself, as I know well. There was a protest in Clonmel and the same applied in Kilbeggan and Dundalk. Now we find that, although the Racing Board said there could be no appeal, the decision is reversed and the subsidies are to continue to be given to these five centres. What happened was that the Board got a guarantee from the Minister that the turnover tax would not be applied to course betting. That was the bargain. That was agreed to by the Minister and the Board reversed their decision to put an end to the meetings in these towns.

I, too, would like to see the bloodstock industry in a healthy state and see our exports in that field expand. However, I will not be put in the position of being told I am jeopardising the future of the industry by suggesting it is outrageous for the Government to exempt racecourse betting from the turnover tax when the necessaries of life are being taxed. The Minister for Lands is on record in this House and outside it as saying that when the new Land Bill came in, and so far as land acquisition was concerned, he was going to get after those farmers who spent all their time going around to race meetings and who did not farm their lands. But these are the gentlemen who are being facilitated today by this Supplementary Estimate. This Estimate is to enable them go round to race meetings in their big Mercedes. Instead of taxing luxuries, this Government are exempting luxuries and taxing necessaries. Nobody could describe betting at racecourses as anything but a luxury. When there is a race meeting down the country it is not safe to be on the [1267] roads with the stream of traffic passing —all the big cars of the people who seem to go from one race meeting to another. Their pastime is being exempted from the turnover tax. It is disgraceful, and I wonder if the public realise what is happening in this regard. It is hard to credit that the Government could have their list of priorities so mixed up.

The case made by the Racing Board for the cutting off of the subsidy to these provincial courses was based on the grounds that the income available to the Board was insufficient to allow them help the centres concerned. But this is very significant: when the Board stated they were going to cut out the subsidy for the Roscommon course, they said at the same time that, even though the day's racing at Roscommon would be ended, they would provide a day's racing in some other part of the country. There was not to be any reduction in the number of those meetings. The idea was that the Racing Board would threaten to close down the meetings at Wexford, Mullingar and Kilbeggan but that they would put on extra meetings at Baldoyle, Leopardstown and other places nearer Dublin.

The argument put forward by them was that they could not afford to subsidise the rural race meetings. If a trainer in Limerick wanted to send a horse to the Roscommon meeting, the Racing Board subsidised the transport of the horse from Limerick to Roscommon. The idea put forward was that they could not afford to do that any longer but do not forget that by putting on the extra races at Baldoyle or Leopardstown, they were going to have to subsidise the same Limerick trainer to send the same horse to Baldoyle or Leopardstown.

It is absolute blackmail on the part of the Racing Board to say that they will hit the rural race meetings, unless they are exempted from the turnover tax but they got away with it. They said to themselves that there would be a howl from the members of the public who attended these racing [1268] meetings and that pressure would be brought to bear on the Government. I know that was so. When word came to my constituency that the meeting in Roscommon was to get the axe, I protested and I also suggested that the Parliamentary Secretary for the constituency should be made aware of the situation and that any influence which he might be able to bring to bear should be roped in also. It was only at that stage that we realised that the Minister himself was under fire in his own constituency because Wexford was another of the meetings to get the axe.

I am satisfied that the Racing Board utilised this threat of closing down the provincial meetings for no other purpose than to obtain exemption from turnover tax on racecourse betting. I suggest that a Government who allowed that to happen when they would not exempt the necessaries of life from that turnover tax deserve what I believe they will get before to-morrow night is out. The only trouble is that the public are not sufficiently well aware of what is going on and what is being exempted from the tax. I hope that it is not too late before the polling booths close this evening to persuade the people, no matter what they may think about the different Parties, that a party who exempt luxuries and tax the necessaries of life are not fit to govern.

Can we describe a race meeting as anything but a luxury? Racing is a recreation and betting at race meetings is a luxury and a recreation. I am not going to believe that the money taken in tax on racecourse betting is going to mean the difference between disaster and survival for our bloodstock industry. I could not accept that view. If it is necessary to have high stakes for particular race meetings in this country, let us not suggest that it is necessary to get that money through racecourse betting alone. We have had the examples set by a number of private firms who have contributed stake money for these races. I assume that those firms are writing off that contribution in a form of advertising and that they will be exempted from income [1269] tax for their activity in this regard.

I shall not name the particular races which we know are carrying substantial rewards given by various firms in this country but we know there are quite a few. Have these firms not got it both ways? Have they not got the advertising value, a form of publicity in that the name of the firm is carried by the race, and are they not also getting an exemption from income tax by the fact that they are spending this money on advertising?

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  Is it not a good system of advertising?

Mr. McQuillan: Information on John McQuillan  Zoom on John McQuillan  I agree. I would be inclined to give incentives in that way if we want to aid this industry but I do not think that the general public, many of whom are not interested in betting, should now be asked to pay additional taxation for what those who are interested in betting should be paying. That is what is wrong. I believe the Minister has lost all sense of responsibility to the general public. He is now saddling them with an impost of £50,000 in order to save the people who go to the races at Baldoyle or Mullingar or Leopardstown from the effects of the turnover tax. I do not believe that is right.

Sir Anthony Esmonde: Information on Anthony Charles Esmonde  Zoom on Anthony Charles Esmonde  This is just another example of the Government's financial policy. It was one of the things not considered before they brought in the turnover tax and they now find themselves faced with the situation as explained by Deputy Dillon and Deputy McQuillan. As a result, they have to come in here with another Supplementary Estimate. I would be quite satisfied that it is necessary for them to have the Estimate because if these race meetings were to be closed down, it would strike an irreparable blow at the horse-breeding industry here.

Next month we will have the Cheltenham Gold Cup and we have two famous horses racing in it. One of these horses was bred and trained in Ireland and the other was bred in Ireland. It is at the small country race [1270] meetings here that we train the horses which make Irish bloodstock famous all over the world. I am surprised that when this whole matter was being thought out, some consideration was not given to facts such as these. It is really a matter of the Racing Board finding its funds depleted. They had to do something and they withdrew the subsidy from these meetings. The only thing the Minister could do was to introduce a Supplementary Estimate as he has done. I hope that already grave damage has not been done, in that many of these companies concerned with these local meetings had to come together and go into liquidation and then at the eleventh hour, the Minister comes with a Supplementary Estimate which I hope will enable the situation to be rectified.

The Minister did not mention any of the racecourses to which Deputy McQuillan referred. I would be particularly interested in Wexford which I think would require particular consideration as a comparatively new meeting in existence for only six or seven years. It hardly had time to get on its feet when it was faced with the situation of the subsidy being withdrawn and the only thing they could expect from the Racing Board was, we understand, that they would still be paid photo-finish expenses and some small Tote grant. I should like the Minister to assure us that he has a guarantee from the Racing Board that the moneys that are being voted for them are subject to the re-establishment of these local race meetings in different parts of the country, thus preserving the encouragement of breeding that has been there throughout the years and that has reacted so favourably on Irish horseflesh.

Dr. Ryan: Information on James Ryan  Zoom on James Ryan  Deputy Dillon was probably entitled to say that I was acknowledging my mistake in imposing this tax but I must remind the House that I had some misgivings about it when it was going through. I told Deputy Cosgrave that I should be meeting the Racing Board to discuss the matter with them. Twelve months earlier, they had told me they were [1271] very much afraid they could not carry on without State assistance. At that time I suggested to them putting a higher levy on course betting and on the Tote. They told me they had considered that carefully and had concluded that it would be impossible, that they would lose more than they would gain. I knew what their mind was before the turnover tax was definitely decided on here when Deputy Cosgrave raised the matter.

When the Racing Board came to see me, they expressed the same opinion when I suggested we should allow the Revenue Commissioners to impose a tax on course betting and on the Tote. They again said they thought they would lose very substantially in revenue and would prefer to leave things as they were and actually pay the turnover tax themselves. That, of course, is done by the 2½ per cent on course betting which goes as turnover tax and racing gets nothing out of it. At that time when I met the Racing Board before Christmas, I was rather impressed by their arguments but since then I find that income from course betting and the Tote has been increasing fairly substantially over the past year. I intend to meet the Racing Board again to put it to them that, as far as I can see, there would be no great danger in imposing a higher levy on course and Tote betting, and make some suitable arrangement with them with regard to a subvention for their own increased expenses. It might be a sort of deal where we would get our turnover tax and they would get more by way of income.

I did meet the Racing Board and I did agree to recoup them more than the tax because they had asked for a subvention before the turnover tax came along. There is something here —not very much, I admit—more than the turnover tax. That was over and done with before I heard of the small courses being notified by the Racing Board that they could no longer give them a subsidy. Deputy McQuillan thinks I did some peddling in the matter. I suppose every man looks at it from the point of view of what he would do if he were in the other man's [1272] place. There was no peddling whatever. I told the Racing Board what I was thinking. I received a deputation from the small courses. They told me they were prepared to do certain things, such as reduce the level of stakes and, I think, cut out the carriage of horses because they claim most of the horses came from their own county.

Mr. Corish: Information on Brendan Corish  Zoom on Brendan Corish  I hope Wexford did not promise that because I do not think there are many horses in the county.

Dr. Ryan: Information on James Ryan  Zoom on James Ryan  They suggested that. I am not saying it was a definite promise. They suggested meeting the Racing Board halfway as it were. I conveyed their suggestions to the Racing Board and the reply I got was that the Racing Board could not agree to some of those things. They did not want stakes reduced and would prefer to drop the matter altogether— which they did. I do not know for how long. Deputy Esmonde says he hopes I got an undertaking but I got no undertaking and so far as I am concerned, if they came along tomorrow and said they were dropping the small courses again, I could not say they had made any promises to me.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  It was a most shortsighted proposal.

Dr. Ryan: Information on James Ryan  Zoom on James Ryan  I think it was. I did not agree with the proposal by the Racing Board at all. Perhaps they have dropped it for all time.

Mr. McQuillan: Information on John McQuillan  Zoom on John McQuillan  I do not want to interrupt the Minister. Did I understand him to say that some of the courses agreed to drop the subsidy on the carriage of horses?

Dr. Ryan: Information on James Ryan  Zoom on James Ryan  These were suggestions made by some of the small courses. I cannot say whether it was made by Wexford in particular.

Mr. Corish: Information on Brendan Corish  Zoom on Brendan Corish  We have no horses.

Mr. Dillon: Information on James Matthew Dillon  Zoom on James Matthew Dillon  Do not be daft: you have some of the best steeplechasers in Ireland, if not flat racers.

[1273]Dr. Ryan: Information on James Ryan  Zoom on James Ryan  No; there are not many race horses.

Mr. Corish: Information on Brendan Corish  Zoom on Brendan Corish  I know my constituency even in the agricultural line.

Dr. Ryan: Information on James Ryan  Zoom on James Ryan  I can assure Deputy McQuillan that there was no peddling and that I got no more pressure from Wexford than from the other four.

Mr. McQuillan: Information on John McQuillan  Zoom on John McQuillan  I say that you got pressure from the five.

Dr. Ryan: Information on James Ryan  Zoom on James Ryan  I did, just as much from Wexford as from the other four.

Mr. McQuillan: Information on John McQuillan  Zoom on John McQuillan  I do not say you got more from Wexford.

Vote put and agreed to.

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